Buy USDINR; target of 70.70 – 70.80: ICICI Direct

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ICICI Direct expects USDINR to find supports at lower levels. Utilise the downsides in the pair to initiate long positions.

ICICI Direct’s currency report on USDINR
Spot Currency
The rupee ended mildly higher even as most risk assets including equity rebounded in yesterday’s session. It ended 8 paise higher and is expected to open further higher today as calming comments from the US President has soothed risk aversion • The Dollar Index rose yesterday tracking gains in US yields as the US President tried to downplay the current simmering US-China trade war escalation. US official’s comments that US Treasury Secretary Steven Mnuchin may visit Beijing calmed the markets. Developments on the trade war remain a key trigger for currencies, especially in EM currencies led by Chinese Yuan.
Benchmark yield
Sovereign benchmark treasury yields declined to 7.38% on Tuesday. Yields remain in a range in the backdrop of gradual rising oil prices but subdued global yields • US treasury yields rose to 2.41% as the US President’s comments soothed the simmering US-China trade friction. China has retaliated with punitive tariffs while the US is readying the list of $325 billion worth of Chinese imports into the US for further up to 25% tariffs.
Currency futures on NSE
The dollar-rupee May contract on the NSE was at 70.59 in the previous session. May contract open interest declined 5.04% in the previous session • We expect the US$INR to find supports at lower levels. Utilise the downsides in the pair to initiate long positions.

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